The Heath Government, 1970-74

Margaret Thatcher served as Education Secretary throughout the term of the Heath Government, 1970-74. In many ways 'Thatcherism' was the product of that experience, both for her and for the Conservative Party.

The papers of the entire Heath Government at Britain's National Archives
are now open for study. Files on crucial episodes have been filmed and placed
on line below, by generous permission of the National Archives. More will
follow.

Margaret Thatcher's relations with Edward Heath

Edward Heath had a poor opinion of his Education Secretary, Margaret Thatcher,
and of her department, from the very beginning of her tenure in 1970, official
records show. Margaret Thatcher struggled to interest the Prime Minister
in education policy, with little success.

Bad chemistry between the two seems to have explained much of the difficulty.
A proposed meeting to discuss "The Principles of Education" took
18 months to arrange and Thatcher's suggestion that it take place over a
weekend at her home in Kent was instantly dismissed by Heath. An official
thoughtfully suggested to the Prime Minister in October 1970, only four
months into Thatcher's tenure as Education Secretary: "I doubt if it
would be practicable to exclude her from the discussion, but you might perhaps
like to bring in a number of non-officials to liven things up".

Nevertheless the long awaited meeting, which took place at Chequers in
January 1972, proved helpful to Thatcher, then at the low point of her time
at the Department of Education and Science (DES). Ironically, the press
interpreted it as a sign of Heath's confidence in his Education Minister
and her officials.

The "Principles of Education" were not much discussed at the
meeting, in fact. The minute shows Heath springing into life only on the
subject of music teaching. Thatcher was well-briefed, as ever, and responded
in detail, instantly conceding the Prime Minister's request that the London
music colleges receive direct funding on the same scale as the Royal College
of Art.

Private minutes also show that Heath was highly critical of DES officials
- as Thatcher was herself on occasion - finding their paperwork slow and
inadequate. In November 1971 there were discussions between the Prime Minister
and officials at Number Ten on "the internal problems of the Department
of Education and Science", an unusual proceeding in Whitehall terms.

The DES could never get it right. Heath complained angrily (with some justice)
that "an amicable process for consultation" on reform of student
union finance had turned into "a very sour wrangle with Dons and students
alike". Less fairly, a technical change to the law governing work experience
for children was rejected by him as "reactionary & wrong",
though it had the endorsement of the Cabinet's Home Affairs Committee and
in modified form was eventually accepted by the Prime Minister himself.

Thatcher on her part criticised to Heath's face his cherished "Programme
Analysis and Review" initiative, designed to identify cuts in bureaucracy
and make expenditure savings. She pointed out the heavy demands it made
on officials and doubted whether it would improve decision-making. In this
she was prescient: historians generally rate PAR a costly waste of time.

By the end of 1972 Thatcher's position politically was stronger and her
relations with Heath a little less strained. She had no difficulty persuading
the Prime Minister to accept a new White Paper Education: A Framework
for Expansion, securing for the DES its share of the rapidly increasing
level of public expenditure.

1971 May: the Paris Summit which took Britain into the E.E.C.

1972 March 21: Budget

The 1972 budget (delivered on Tuesday 21 March) was a critical moment in the rapid evolution of the Heath Government, reflating the economy to reverse the rise in unemployment figures (which passed one million in January 1972) and laying the groundwork for a more systematically interventionist industrial policy. Critics saw it as one of the first (and largest) deviations from the party's manifesto of 1970, a harbinger of the "U-turn" and a significant contributor to the massive inflation of 1973-74.

The Prime Minister's file on budget preparation (PREM 15/818) (232 pages) shows him pressing for greater measures of reflation than his Chancellor and senior officials originally favoured. But at a meeting on 6 March Sir Donald MacDougall, Chief Economic Adviser, backed the more radical course, signalling a shift in Treasury thinking towards a pessimistic reading of the prospect for economic growth in the year ahead.

The file also shows Prime Ministerial concern as to how Conservative backbenchers would respond to budget measures designed to boost Britain's regional economies, as well as irritation on the part of industry ministers at their exclusion from the planning of a budget of unusual breadth. Margaret Thatcher's view at the time went unrecorded.

1972-73: Chief Whip's reshuffle notes for Edward Heath

The Cabinet Office has recently begun releasing a new series of documents on government appointments (PREM 5), which include sensitive reports by the Chief Whip to the Prime Minister assessing colleagues and suggesting reshuffle moves.

In the early years of the Heath Government Margaret Thatcher had a rough time as Education Secretary. During this period the whips at no point suggested that she be moved (or removed). She appears in the notes only after 1972, and always in a favourable context.

The most significant suggestion for her future dates from October 1972. As the Government prepared to introduce a new statutory prices and incomes policy (one of the most significant of the " U turns " of 1972), the creation of a new Minister of Fair Trading was planned, with responsibility (among other things) for new powers to control prices. The post was expected to have a large impact on public perception of the government, particularly among women voters.

The file (PREM 5/ 530) shows that MT was very seriously considered for the job. The Permanent Secretary of the Department of Trade and Industry (in whose department the job would have been located) was asked by the Head of the Civil Service to comment on how things would work with MT in the post, a request which strongly implies that the Prime Minister was giving the idea close consideration. And assuming that was the case, one can only conclude that Heath supposed MT a solid supporter of the new statutory policy.

In the event, the reshuffle never took place because the advice was overtaken. The Government itself fell within months. MT was then made Shadow Environment spokesman when responsibilities were handed out in Opposition and as a result played a key part in the political controversies of housing and interest rates in spring and summer 1974.

1973 November 16-17: Heath's last summit with President Pompidou

Released only this year, the records of Heath's final summit with the French
President, Georges Pompidou, show the scale of his ambition to recast British
foreign policy in a European, rather than an Atlantic, mould. (The documents
derive from PREM 15/2093.)

Heath's relationship with Pompidou was crucial to his foreign policy. Their
summit in Paris, in May 1971, had cleared the way for British membership
of the European Economic Community. Any major British initiative within
the Community required French agreement as a practical necessity.The many
files of briefing and preparation for this meeting are reminiscent of those
prepared for meetings with US Presidents.

The records of these conversations show Heath pressing Pompidou to make
rapid progress on a number of issues at the Copenhagen European Council
the following month. Pompidou's responses were cautious, hinting at French
and German reservations.. It is perhaps unsurprising that the Council proved
a disappointment to the British Government.

1973 December 17: Emergency Budget

As a result of the Arab-Israeli war in October 1973 the cartel of oil producing nations (OPEC) dramatically increased its prices and simultaneously reduced oil exports to European nations, cutting off all supply to the US and the Netherlands in retaliation for their strong support of Israel.

Brtiain avoided a total embargo, but industrial action in the coal, electricity and railway industries made fuel supplies critically short, prompting the Government to declare a "three day week" for industry on Thursday 13 December and to introduce a deflationary emergency budget the following Monday.

A week before the three day week, a Prime Ministerial file (PREM15/1429) (39 pages) shows the Treasury working on a package of tax,
credit and spending measures. The intention was to slow the booming economy
and so reduce Britain's balance of payments deficit, which was forecast
to reach the unheard of level of £3,000 million during 1974, threatening
a sharp fall in sterling and consequent rise in inflation.

Heath's Principal Private Secretary, Robert Armstrong, briefed him about Treasury thinking on 6 December. Armstrong's note shows that privately it was understood within government that the fuel crisis was only part of the problem: Britain was developing a huge balance of payments deficit in any case, as the economy overheated. Understandably, however, the measures were presented to the public as a consequence of events outside Government control, with OPEC and the trade unions serving as highly credible bogey-men.

The situation continued to worsen after the emergency budget, with OPEC raising oil prices again - more than doubling them - on 23 December and the miners moving from an overtime ban to a full strike on 5 February 1974.

During the February 1974 General Election, the terms of British entry to
the European Economic Community were sharply criticised by Labour, which
promised "re-negotiation" if elected.

Britain's heavy net contribution to the EEC budget was the crux. Although
the Heath Government defended its record in public, a remarkable letter
from a senior Foreign Office official in Brussels shows that other European
governments were already being pressed privately by Britain to revise the
budget settlement.

The letter describes a dinner of European Finance Ministers at which Helmut
Schmidt, later German Chancellor, admits that the British were paying too
much and expresses a readiness to look again at the terms of entry.This
discussion took place a full ten years before the question was settled at
the Fontainebleau European Council of June 1984.